The “end of crypto”? | Fortune

[ad_1]

FTX’s disaster had no shortage of hot takes, but the spiciest of them all came from The Economist. The main story from the latest issue of the venerable magazine titled Is This the End of Crypto? is accompanied by a blanket depicting meteors hitting the earth. The prose withers.

Never before has crypto seemed so criminal, wasteful and wasteful, The Economist writes of the post-FTX fallout. Big personalities, incestuous loans, overnight meltdowns, these are the stuff of classic financial manias, from tulip fever in 17th century Holland to the South Seas bubble in 18th century Britain to crises. American banks in the early 1900s.

It’s hard to argue. In a decade of crypto coverage, I’ve seen endless scams and disasters, including the catastrophic Mt. Gox hack of 2014 and the ICO-era casino-rama frenzy of 2017, but nothing quite like it. severe. The collapse of FTX not only blew tens of billions of dollars in value, but also deeply damaged confidence in an industry that only two weeks ago seemed poised to enter the mainstream of American finance.

But the end of crypto? Far from there. Things are bad and likely to get worse, but in the long run the industry will recover and emerge stronger than ever. My reasons for optimism are twofold. The first is the people. While there are plenty of quacks making headlines, the majority of people working in crypto have integrity and are working hard to build real businesses and improve the blockchain technology that Satoshi Nakamoto presented at the world 14 years ago.

The second source of optimism is the technology itself. Even the Eeyore from The Economist were keen to praise blockchain’s transparency and efficiency, as well as its ability to enter into trustless smart contracts and new governance agreements through the distribution of tokens. This is all true, and if you want real-life success stories of what crypto can do, watch Ethereum’s unlikely move this year to proof-of-stake or Bitcoin, which is becoming increasingly proven and trusted. every year.

That doesn’t mean all is well, of course. The trust lost in the FTX debacle will take years to rebuild, and as The Economist notes, the crypto industry needs to grow and deliver useful products to the world rather than greedy token grabs and exotic financialization gimmicks. It may take time, but it’s definitely not the end of crypto. Rather the end of the beginning.

(Errata: Yesterday’s newsletter incorrectly stated that BlockFi has filed for Chapter 11 at this time, there are only rumors that it will. Also, Bear Stearns has collapsed before Lehman. Thanks to readers Mike, Aaron, and Richard for pointing out.)

Jeff John [email protected]@jeffjohnroberts

DECENTRALIZED NEWS

Genesis is closer than ever to bankruptcy after the struggling crypto-trading giant failed in a last-ditch effort to raise $1 billion in fresh capital. (Bloomberg)

Crypto prices took another hit amid FTX’s latest batch of bad news, as Bitcoin fell 4% to around $15,700 and Ethereum slipped 8% to around $1,100. (CNBC)

Billionaire and VC gadfly Mark Cuban has just unfollowed a string of prominent crypto accounts, but he says his support for the industry remains unchanged. (Fortune)

The Coinbase CEO is the latest subject of a Financial Times “Lunch with the FT,” with the meal going as awkwardly as you’d imagine. (FT)

The creator of Ethereum says zero-knowledge proofs will be key to creating a reserve verification regime to prevent exchanges from tapping into customer funds. (Vitalik Buterin)

EVEN OF THE MOMENT

Crypto Twitter is gearing up for Friday:

This is the web version of Fortune Crypto, a daily newsletter. Sign up here to get it delivered to your inbox for free.

[ad_2]